The legal system is an institution that adapts law as per the requirements of the time. It chooses certainty over flexibility. Tech, on the other hand, has been only accelerating its rate of change in current times. Here, we have a developing situation where instead of a reactionary and retroactive policy to apply novel interpretations after the fact of a potential breach, strict regulatory oversight by the SEC is being modified with a free market approach, taking active and immediate consultation from the regulatory giants. Crypto, blockchain and stablecoins are here to thrive, it seems. At least for now. Of course, it’s not like no challenges mark the horizon. The cloud cover, though, is certainly clearing up. For now.

The SEC and Presidential Office has been very active in recent months where it comes to crypto, realizing the need for rapid reform in the ecosystem. On Jan 21, 2025, Chairman Mark Uyeda relaunched SEC’s Crypto Task force for proactive regulatory oversight. On January 23, 2025, an Executive Order used Presidential powers to rapidly streamline legislative reform and regulatory clarity in the cryptocurrency market  rather than relying on the standard legislative process for proposing laws. Along with establishing the President’s Working Group on Digital Market Assets, a key development to note is the timeline for unfolding events in the months to come. Here is the timeline for the rollout for this executive Order (from January-June 2025):

TIMELINE

By 28th Feb, 2025

·      Treasury, DOJ, SEC & regulatory giants “identify” all existing regs, guidelines, orders to provide a comprehensive, overarching inventory simplifying the complex regulatory scheme of the digital asset sector

GOAL: COMPREHENSIVE INVENTORY OF POLICIES AFFECTING DIGITAL ASSET INDUSTRY

By 31st Mar, 2025

·      After initial review, each regulatory giant shall provide recommendations to the Chair of the Working Group addressing whether each identified reg, document, order, or item, should be rescinded, modified or formalized in a regulation.

GOAL: STREAMLINE + CLARIFY REGULATORY LANDSCAPE FOR DIGITAL ASSETS

By 30th Jun, 2025

President’s Working Group, consisting of these regulatory giants, submits a report to the President recommending regulatory and legislative proposals that advance the policies established in this order.

GOAL: REGULATORY CLARITY ACHIEVED AND SIMPLIFICATION FOR ICOs AND DIGITAL ASSETS’ (including stablecoins) ONGOING COMPLIANCE REQUIREMENTS

FEB-MARCH 2025 CRITICAL UPDATES

1.   FEBRUARY 4, 2025:

The GENIUS (Guiding and Establishing Innovation for US Stablecoins) Act has been introduced in Senate for approval. Once passed, it will regulate all stablecoins existing and to be launched in the US market. It will act as a bridge to the transitioning landscape of connecting the ISO 20022 standardization with the cryptos compliant to this standard. This move will shift financial systems from using SWIFT technology for monetary transactions to transacting by cross-border flows using blockchain technology networks.

2.   FEBRUARY-MARCH 2025:

Multiple crypto companies breathed a sigh of relief as more than 6 major lawsuits and pending investigations were paused or withdrawn while awaiting regulatory clarity after SEC’s crackdown policy with a landmark $4.6b in fines in 2024. SEC announced this for Kraken, Coinbase, Binance, OpenSea and Robinhood, amongst others. This in effect allows crypto companies to focus on innovation and product development at this time.

3.   MARCH 14, 2025:

Franklin Templeton made history as the largest asset management company in the Solana landscape, who filed a Solana-based ETF to track the market price of Solana, valued at $1.5 trillion for what the company manages. Bloomberg analysts estimate a 70% chance of this being approved.

4.   MARCH 19, 2025

SEC DROPS ITS APPEAL IN SEC VS RIPPLE: FOUR YEAR LEGAL BATTLE ENDS

a.    KEY FINDINGS: On August 7, 2024, Judge Torres of the US District Court Southern District of New York declared Ripple- traded as XRP (hereinafter interchangeably used in this Article) does NOT MEET Howey test criteria to classify as a “security”. SEC had argued that Ripple is a security whereas Ripple argued that it is a “commodity” or currency. However, Ripple did get slapped with an 8-year bar on institutional investors, fine and violation. The ruling held that “common enterprise” element of institutional investors was met by engaging in a profit-making financial enterprise. This was a section 5 violation of the SEC act.

b.   FINE, PENALTY AND 8-YEAR BAR ON RIPPLE’S INSTITUTIONAL INVESTORS: Ripple’s contention that it was in actuality building blockchain network from capital, meaning Ripple is a utility token, was denied. A hefty penalty and bar for this SEC violation, as described above, followed and is detailed here. This consists of an 8-year bar on securing institutional investors for funding as an injunction. Along with a $125 million penalty of violation (currently in escrow), which is still effective.

c.    SEC AND RIPPLE BOTH HAD FILED APPEALS TO THE RULING: What has been dropped is the threat of further litigation on the SEC’s behalf. Earlier, in response to this judgment, SEC’s appeal had reiterated its stance that Ripple is a security and all of its activities to generate funds are regulated by securities laws. Ripple’s cross appeal to reconsider this judgment was on 2 grounds: i. no violation of the SEC Act occurred and ii. fine penalty is unwarranted. As it holds that no violation of the law occurred, it is unfair and not legal to do so on the grounds that the law itself does not clearly establish right and wrong in this regard, where substantial grey area exists.

d.   PENDING SETTLEMENT NEGOTIATIONS: Since further litigation has been dropped, Ripple is working out whether to pay the fine or settle this amicably by structuring a deal with SEC now that SEC has withdrawn from appealing the Torres ruling (to establish Ripple as a “security”). Ripple, too, has withdrawn its appeal. The most recent news update, as of the time of writing this, states that there will be an SEC Board voting on the 27th of March to decide further how to proceed with settlement conditions being worked out.

Hold on, though. What is a potential cause for long-term concern here is the uncertainty due to the lack of consistent policy and regulation over subsequent government regimes, depending upon who is in office in this term. Given Biden’s strict regulatory oversight approach followed by Trump’s liberalization of policy, the landscape is still up for cautious optimism.

Tech Tuesdays by That Global Tech Attorney Girl

From the Desk of Dr. Sarah Farid, Esq.

The writer is a licensed attorney with the State Bar of Texas, holding a BA in Economics from Rice University. She is the world’s only tech attorney qualified to practice law in 3 common law jurisdictions worldwide. As an industry leader with dedicated focus in cross-border data, AI, cybersecurity and crypto legal consultancy work, she runs a global tech practice, RNM Law at RICC Corp., and may be contacted at sarah@rnmlaw.net.

Nothing in this article suggests legal, trading or financial advice. This article is for informational purposes only. Independent analysis and expert advice should always be sought before making such decisions.

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